Hi, it's Bob Saffian. You've been hearing me as the host of Rapid Response in this feed for a few years now. Well, I'm excited to share that Rapid Response has expanded into its own feed. We're releasing shows twice a week, focusing on the urgent issues that business leaders are dealing with in real time. While some rapid response episodes appear on Masters of Scale, many of our best are only available every week in the rapid response feed. To make sure you catch it all, search for rapid response wherever you get your podcast and subscribe. See you on the other side.

The very first person to stock up vacuum cleaner was a mail order catalog. I was trying to sell to the buyer from this catalog, and I was able to demonstrate it. We sell a dry powder carpet shampoo that you can use with it as opposed to wet shampooing carpets. He said, That won't work. So I went off to the local petrol gas filling station, and got some Rybina. Do you have Rybina? This blackcurrant juice? Concentrated blackcurrant juice drink. I came back and threw it on this carpet and then put the powder down and vacuumed it up, and it worked. He said, Why should I chuck out a well-known brand out of my catalog and put in your thing? Very expensive. Nobody understands it. And who are you anyway? And I said, Well, because your catalog is boring. Boring, boring, boring. And he looked at me for five minutes and said, Okay, I'll give it a try.

That's engineer, inventor, and entrepreneur James Dyson, who founded the Dyson Company over 20 years ago. He's probably best known for his breakout product, the Dyson vacuum cleaner. With its bright colors, sleep design, and clear body, it looked like nothing else, and it worked like nothing else. It used patented dual cyclone technology, separating dust from air at a speed of 924 miles per hour. James Dyson's road to his first hit product was long and it was rough. He turned that success into an invention empire, starting the Dyson Company in 1993. Driven by engineering challenges, Dyson has developed a plethora of innovative household items like hair dryers, air purifiers, and fans. He's also stretched to electric cars, robotics, and now AI. James is driven by exploring what is possible. That mindset is what helped him grow his breakthrough vacuum cleaner into a technology company with thousands of team members worldwide. His scale story is one where innovation leads the way and business decisions follow. I'm Jeff Bermann, your host. You got to have incredible talent at every position. It's like this huge push.

There are fires burning when you're going home.

Can you believe it?

It's such an idiot.

And then you go back to, this is totally going to be amazing. There are so many easy ways.

I'm supposed to know what to do.

I have no idea what to do.

Sorry, we made a mistake. But you have to time it right.

Oups.

Working out a three-bed apartment.

Stuff that just seems absolutely nutball.

Ten years later, we're like, Well, that's just how you do it.

We haven't made it just how you do it.

This is Masters of Scale.

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James Dyson. Good morning. You are joining us from the Dyson showroom in New York. Welcome to Masters of Scale.

Good morning. Good to see you. I got caught in this torrential rain as I came in. It never rains in England, so I'm completely unused of this.

Wouldn't it be wonderful if you had a hairdryer that you could use?

Now, funnily, you should say that, but actually, we put three hairdryers on me as I came into the shop here.

Dyson's hairdryers are highly coveted, even at a point far higher than most of his competitors.

It took three of them to dry me, which is not a criticism of the hair dryer. It's just I was very wet.

Like all of Dyson's products, the supersonic hair dryer uses pioneering technology, like temperature protection for your scalp and remembering your go-to preferences. But James Dyson didn't always dream of creating beloved high-quality household helpers. Growing up, he wanted to be an artist. So let's go back to rural England in the 1960s, when James was an art school student and path took a turn.

The principal of my first art college saw me painting and drawing, and I suspect decided the world didn't need me as a painter, and he suggested design. This is 1965. I'd never heard of the word design. So I said, What's design? And he said, Oh, well, you can design furniture, glass, ceramics. I said, I'll do furniture because I've sat on chairs. So I went to the Royal College of Art and Design to design furniture. And when I was there, I discovered the architecture department, the scale of architecture and the complexity of architecture really interested me. And while I was doing architecture, we had a rather brilliant structural engineer talking about structures. I suddenly realized that I loved engineering. I'd never been exposed to it. Historically, in architecture, architecture had been about concrete and bricks. But in the '60s, with Friotto and Buck Mr. Fuller, the wonderful American to an architect, that now the engineering would be the thing that mattered. Buildings would change because of engineering, and the buildings would express the engineering. So that's how I got into engineering.

When you made that turn into engineering, you were working on such an incredible range of projects, something called a C truck, a better wheelbarrow. How is it that you came to decide that you were going to develop a better vacuum cleaner of all things?

Oh, frustration. I had a He was called a Hoover Jr, which was typical of a vacuum cleaner of that era, which had a bag. I was vacuuming one day and it wasn't picking up. I thought, Why isn't it picking up? Perhaps it needs a new bag. I went and emptied the old bag out because it was full. I sealed it back up again, put it back in the machine, and still no suction. Now, I thought, Why isn't it sucking? I suddenly twigged that the bag was empty, but the pores in the bag were clogged, and it's the pores of the bag that result in it being a filter. So I realized how frustrating this was because the first dust that goes into the bag goes straight to those pores and blocks them. So I looked around for something that would solve this problem.

And like so many inventions, it came from your own need, your own desire for something better. But it took you, as I've read, something like 5,000 prototypes in four years to arrive on your final design. Can you help us understand what lessons you learned in that process and why it took so much iteration to get to something that you felt was right?

When you develop something, you only make one change at a time. It's not a question of brilliance. Oh, I wonder if this complete thing would work because A, it doesn't, and B, you don't know why it doesn't work. What you do is you start off with your basic idea, in my case, a cyclone, which separates dust by centrifugal force. You typically see them outside factories and cement works and sawmills as a means of collecting very fine dust. But I was doing it on a miniature scale. I was making one little change at a time, development by iteration. It was before the age of computers.

His book, Invention, A Life of Learning Through Failure, describes how he tweaked his vacuum to capture smaller and smaller particles, changing the angles of key parts, the length of the main chamber, and any other detail that might yield a better result. At the time, Dyson was building with the equivalent of caveman tools. It took what felt like forever. Today, powerful computing speeds up designs like James Dyson's, but the need to iterate remains the same, making precise, controlled changes to your product can unlock innovations that create a massive impact.

I had to do everything empirically. Very painstaking. I always like to say I had 5,126 failures over a period of four years. Then finally, 5,127th worked. I came in covered with dust, and there were highs and the below. But it was just fascinating, discovering what works and what doesn't work.

So what did you do when you finally got it right? After those more than 5,000 efforts, more than four years. What did you do once you had it?

I went off to try and license it to all sorts of people, including all my competitors. They all had a good look at it, but none were interested in licensing it.

Why not?

They didn't really want to change. It had become a very boring industry. They were all selling the same thing, same technology, and presumably making money. They don't want to improve. They don't want to make a better product. They don't want to get rid of bags and the problems of bags. They're quite happy as they are.

Quite happy not just making the same vacuum cleaners with their dusty bags, but also happy selling those bags as a revenue stream. It's in that complacency, the other company's incentive to shoot down his improvement improved technology, that James Dyson understood his business opportunity.

I ought to set myself up and compete with them. So I decided to set myself up as a manufacturer from scratch to take on these big multinationals.

Did you raise money at that point, or you were just going into debt to do this?

Well, I discovered I was hopeless at raising money. I went to venture capitalists and the people I suppose who ought to have lent the money, but they wouldn't because they said, We're not lending it to an engineer.

Especially an engineer who might have seemed more of an eccentric inventor, perhaps not practical enough to run the financial side. Eventually, Dyson gave up on investors and took out a loan from a bank. He had to get a friendly manager to appeal on his behalf to get the funds. It was about six £100,000 British pounds or $900,000, as he recalls. This was 1992.

Quite a lot of money, which I take you took on personally.

Yes, exactly. Putting my house out of this collacial.

Yeah. So you went deeply into debt.

Yes.

How did you think about, functionally, where to bring people in and when to bring them in? Because if you're taking on debt, you've got expensive manufacturing, you've got a supply chain, you've got to manage, et cetera, et cetera. And you must have been very cost-conscious, right? If you're dealing literally with borrowed money and you're personally liable for it. So I'm curious just about how you made the decision, okay, I'm going to invest money to hire someone, and when you did that.

Well, the best thing I do was to hire three graduate engineers The business started with the four of us doing the drawings for all the components. And then we, as engineers, went out to the subcontractors, the tool makers, and to people who might assemble the product for us. As it happens, we couldn't find anyone to assemble it. The people who are doing the moldings for us had a half empty factory. So I said, Can I rent the other half to do the assembly? So we didn't have to buy a factory. We did have to buy tooling, and that was our biggest investment. It was about six or seven hundred thousand pounds worth of tooling. And the tooling means you inject plastic into the molds, and the molds are called tooling. We, as engineers, did that. So we had no production manager, no quality control person. It was just four of us engineers doing that. Then we had to hire someone to run the assembly line, and of course, people to assemble on the assembly line.

James and his team succeeded in solving the assembly line problem, so it was time to turn their attention to sales. The vacuum market was packed with big established brands. James could promise his technology was better and more innovative than theirs, but he could not promise store owners that the vacuum would sell.

So when I approach the retailers, they weren't interested at all. They said, Look, we're selling all the big brands. Why on Earth would we sell a Dyson? It looks strange. Why would they buy it? And of course, you can't say why they would buy it. Why would they give over space in their shop to you? Their reputation is on the line. I quite understand that. At the time in the early '90s, everything was sold on discount and price. I thought that was wrong. It's boring for a start. When you're looking at his price rather than looking at specification and how things perform. I think performance and durability, enjoyment of use, ease of use, not having to have bags and filters, I thought all that was important. And one of the problems in the early days was getting retailers to allow us to say next to our vacuum cleaner on the stand what the difference was, what the technology was all about, because in those days, they just wanted people to buy on price. So that was quite a big breakthrough, getting what we call point-of-sale display material onto the product. That made a huge difference for us.

It wasn't just a bet that performance could be a selling point. It was a bet that high-performing vacuum technology could command a big premium. Dyson's Model 1 dual cyclone DC01 cost $275. That was more than double the average household vacuum at the time. His bets paid off. Only a year after the dual cyclone model hit the UK market, it was the number one selling upright vacuum in the UK. After two years, Dyson was outselling the classic Hoover brand. By 1997, Dyson Vacuums were earning about 1.6 billion in sales. Technology, design, and performance were winning.

And as the product started to take off, I have to imagine that half of a manufacturing plant was not sufficient. How did you make the transition from small-scale to large-scale manufacturing? What had to happen for you to get there?

It's a painful growing process. You have to employ a lot more people to assemble the product and finding that maybe some people you recruited initially just couldn't cope with the scale. You keep having to move factory. You have to find more suppliers. Some suppliers don't want to make more product. So it's a painful growing It is fascinating. A lot of people think manufacturing is very boring. It's a repetitive process. Actually, everything goes wrong every day. So it's a matter of solving problems all the time. And I was able to recruit good people to help me, and ultimately, to run all that for me. But I learned it all on the way out. I mean, it is interesting. We went into Japan very early on for various reasons, and Japan wanted everything to be much smaller. They love miniaturizing things. We started developing vacuum cleaners just for Japan, small ones. Then we discovered that the rest of the world wanted small things as well. It's interesting how designing things for one culture suddenly gives you innovation in another culture.

James released several more iterations of the DC01 vacuum, focusing on designs that were more compact or had special features like a power nozzle. But the company was not going to stop at simply sucking up dirt. Coming up after the break, how James Dyson decided where to innovate next.

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Welcome back to Masters of Scale. We're exploring the scale story of James Dyson and his life of Innovation with the Dyson Company. You can find this full interview and more at the Masters of Scale YouTube channel.

It feels like such a shift from artist and engineer-inventor to entrepreneur and scaler of a company. Somewhere along the way, you realized and then made the decision that Dyson couldn't just be a vacuum company, that you had to expand into other product lines to scale, to fulfill your potential.

Could you share with us how you made that decision and then how you chose what directions to go in in exploring new product lines?

Firstly, I wanted to do other things. It wasn't that I felt I had to because I I didn't have to. You can have a very lovely, relatively simple business, just making vacuum cleaners, but I wanted to do other things. The other things I didn't do as part of a business plan. I did them because I had some technology that could make that product work better. So that's how I approached it, just doing products that we find interesting and fascinating and that solve problems. It wasn't a conscious decision, for example, to go into the beauty business. It's just that we had a particular motor, this tiny little motor, which could replace this huge motor that you see in hair dryers and be quieter and more efficient and dry hair better. With hand dryers, we had no idea of the market size because it's quite a concealed business, but we felt we had a much better hand dryer that used 700 watts instead of 3000 watts and dried much quicker. So we thought it was a better product, but we didn't research the market to see how big it We just wanted to sell it because we thought it was a better hand dryer.

So it's always the technology that decides that we should go into a certain product area. It's not a business decision. I mean, you could say that's a stupid thing to do, but it's the way we are. We go where our technology takes us.

Going where the technology leads instead of building the business plan first. That's a risky but captivating theory of scale. And it's worked in Dyson's favor many times, but sometimes it fails. That's what happened when James Dyson went after the electric car market.

The industry thought that only 2% of cars by 2030 would be electric. We decided that couldn't be right. More than 2% of people were going to go electric. People would vote with their feet. The industry wasn't taking any notice. We made electric motors, new technology batteries, and we know quite a lot about air movement and air treatment. That's pretty much a car. We were quite interested in having one big project. And a car certainly answered that, that question. And we developed it with huge enthusiasm. We were all very keen on it and were passionate about it. And probably that was a bad business decision.

The electric car project hit a snag that James could not have anticipated. In 2015, a major scandal erupted: Dieselgate. Volkswagen, one of the world's biggest car makers, was cheating on diesel emission tests. This caused public uproar in Europe and the US and resulted in stricter automotive industry regulations. Car makers had to get in gear to make cleaner cars and fast. You might think this would have benefited Dyson and their plans for an electric car, but suddenly, they were not ahead of the curve. The heavy hitters rushed in, and now Dyson faced heated competition.

Just to give one example, if you're a new manufacturer starting up, small scale, you're paying 30 to 50 % more for each component than an established manufacturer.

And that's because they can buy at much larger scale, so they have pricing power.

Exactly. They've been in the market for ages. They know the suppliers. They've got a reasonable price. But we were the new kid on the block, and we were probably being taken advantage of on cost. And to be small scale in the car business is very difficult. I don't have Tesla's type of money, so we recognized that it would be a really long haul to make it profitable. Very sadly, we had to tell everybody involved in the project that we were stopping it. We'd spent £500 million, the $700 million on it. It didn't really teach us that much. We didn't really get much from it, except some very talented people who we'd recruited to do the car project who came into the existing business with us.

When you make that big of an investment, you put that much time and money into it, and then you pull the plug on it, how do you explain that to your internal stakeholders?

What is that process like at Dyson?

Well, I'm the investor, so I'm talking to myself, so I don't have to explain things to investors. I do have to explain things to the workforce, and we had to explain the commercial reality that it would be very unlikely in the short term that we make any money from it. We might in the long term, but to struggle through to the long term making losses is not a good thing to do. And they understood that. Actually, the world was looking for electric car engineers years. Those who wanted to go off and continue in cars went off and continued happily in cars, whereas those who wanted to stay with us stayed with us. But it's a sad moment. And as you say, it's not just the money, it's the hard work, all the emotion, all the enthusiasm, all the long hours that have gone into developing it. But that's what our life is. Our life is a risky life. We spend a lot of money developing new technology. It can take years and years. We've been developing new battery technology for 10 years, and we're still not on the market with it. These are big, big investments, which are risky investments.

And the innovation is a risky business.

When James looks back on the failed electric car initiative, the biggest takeaway may be to control what you can control, like your own iterative process, and to let go as much as possible of what you can't.

The only thing we did wrong, probably, was making the decision to go in in the first place. When we set out to do it, there was wonderful Tesla, but nobody else. We felt the industry was wrong about that. But of course, circumstances changed, and we probably should have stopped. The moment Dieselgate happened and we saw what the big car manufacturers were doing, we probably should have stopped at that point. But we carried on for another two years and then realized that our worst fears were being realized and that we should stop it. You can't really learn anything from these experiences because things that happen in the future have different circumstances. I mean, I never believe that experience helps anything. I prefer naivety. It sounds ageist, but I try to employ young people who are unafraid of failure, unafraid of trying something new, and unafraid of pioneering. Experience people always know why you shouldn't do something. I want people who don't really have that problem, who, in their naivety, question things and want to do things differently and are prepared to ignore the doubting Thomas's.

There's an inherent tension in this, right? Because it's essential that you have people with the right experience and expertise in understanding how things work, how to build things. And yet you want that naivete. So how do you balance the need for specialized expertise with that outsider's perspective and the fearlessness of youth or lack of attachment to the way things have historically been done in a certain industry?

Yeah, Now, you're making a very good point. You need that mixture, but you need a lot more of the naivete and very little of the experience. If you have too many experienced people, the general mood is one of doing things in the ordinary expected way. But what you need as an experienced person, for example, running a manufacturing operation who's done that before, but all the people supporting him, hopefully, would be people for whom this was the first time. They're pioneering. Then they're pushing that person to do things differently and not be afraid of doing things differently.

A culture of invention feels critical for a company like yours. It can't all come from your brain, I imagine. I appreciate bringing in people who have that outsider's perspective. How have you scaled the culture of innovation so that it's not just you coming up with these product concepts?

I don't come up with any of them now. I call lots of bright people who come up with the ideas. It's just simply an attitude. Every Every minute of the day, when someone has an idea, you say, That's interesting. Why don't you go and work on it? As opposed to saying, Well, that might not work. If you suggest this negativity, then that spreads. But if you have enthusiasm all the time for new ideas, and you're known as a business for fostering and nurturing new ideas, then you tend to gather around you people who do have ideas. So it's an everyday thing. If an idea is a bad idea, explain carefully and sensitively why it's a bad idea.

James emphasizes a beginner's mindset to drive innovation, to design outside and beyond the molds we know. In the spirit of scaling innovation, he opened the Dyson Institute of Engineering and Technology in 2017. As is so often the case with James, the institute started as a solution to his own problem. James saw the massive shortage of engineers and the urgent need to train more of them.

I'd been going to every new government minister of education saying, We need more engineers to solve all the problems. But also because products now are much more complex than they were 30 years ago. You have AI now, you have software, you have electronics, you've got to use fewer materials, you've got to make things smaller, you've got to consider the environment and so on and so on. You need five or six times the number of engineers now to do a product than you did 30 years ago. So I've been badgering the government to do something about getting more people into education and science. And of course, as governments, they've done nothing. About eight years ago, I went again to the new minister, and he said, Well, if you're so worried about it, do your own university. I said, I can't. And he said, Well, I'm going to change the law. And he changed the law. In 2017, we set up our own new university and took in our first intake of 45 schoolchildren, one or two of them, even 17.

The law that was changed was the UK's Higher Education and Research Act, which makes it easier for new providers like the Dyson Institute to award degrees. At the Dyson Institute, students go to school while also working at Dyson. By designing new models for higher education, James has built a new pool of talent and has created economic opportunity where it previously did not exist.

I'm simply horrified by the debt that students have to take on now for their living accommodations and their fees. It's completely wrong to me that at that stage in your life, you should leave university owing 60,000 pounds, $90,000, whatever it is. As you start to make your way in life, it's wrong. I think I found a way to stop that. They have a contract of employment with us. We pay them. In fact, I always joke that they're the only students who pay tax and are net contributors to the state. They work three days a week with our scientists and engineers, and we teach them for the other two days. They do a 47-week year. They don't do an academic year. Our undergraduates are being taught by practitioners, not by academics. They're a wonderfully enthusiastic lot. They are naive and question our experienced engineers, which is exactly what I wanted. They invent things, and they're inspired to do their academic studies.

As we think about the need to re-imagine education globally, do you view this as a scalable role model?

I do, yes. I mean, there's a cost to it. It costs us, but I think we get back more than it costs us.

James, let's wrap with this. I have to imagine that you are stopped on the street. You are accosted by aspiring inventors everywhere. What's the one piece of advice you make sure to share with them?

I never give advice because you don't know their situation. In any case, what's happening tomorrow is totally different to today. The one thing I do say is never give up. Often, the very point where you're exhausted, depressed, everything's going wrong, and you want to give up, success is just around the corner. I liken it to running a mile because I used to be a long distance runner. The moment you want to give up is the end of the third lap. Everybody else is exhausted. That's the moment you should accelerate because you'll win and get to the finish line.

Thank you so much, Jeff.

It was a good conversation. Thank you.

James Dyson has dedicated his life to inventing. That's given us uniquely designed products that have become household staples and an inspiring story of scale. Instead of fixating on market demands and profit projections, Dyson is driven by a passion for technological innovation. James Dyson embraces the risks inherent in innovation and views failures as stepping stones. He successfully fostered a culture of invention of the company that bears his name while building a team that spans the globe. His model of scale is built not just on selling more of what you already buy, but on constantly inventing and investing in the future by training a new generation of innovators. I'm Jeff Berman. Thank you for listening.

Hi, everyone. It's Jeff Berman, CEO of Wait What? And co-host of the Masters of Scale podcast.

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